OBJECTIVES : A lifecycle pricing approach was recently proposed by the manufacturer in a NICE appraisal of a Cystic Fibrosis treatment, whereby a price reduction for the intervention was modelled after patent expiration. The objective of this study was to assess practical considerations for incorporating this approach into Health Technology Assessment (HTA) policy.

METHODS : A targeted literature review was conducted to assess the evidence supporting a lifecycle pricing approach and case studies were examined to demonstrate key elements for consideration in HTA policy.

RESULTS : A lifecycle pricing approach within HTA assumes that it is possible to predict the timing and magnitude of price reductions after patent expiration. Not all medicines will face significant generic challenge. Manufacturing process challenges, randomised controlled trial requirements and patent litigation challenges in biosimilar development are often cited as reasons why market entry and subsequent price reductions are more difficult to predict for biologics than traditional generics. Market prices may be significantly reduced with biosimilar entry but the magnitude of reduction and timing of the reduction in prices is uncertain. There are cases where medicines are accompanied by a superior patent protected device that protects market share and premium pricing despite cheaper generic alternatives. Additionally, biosimilar/ generic manufacturer interest has focused upon market attractiveness and this raises the question if a lifecycle pricing approach would be appropriate for rare illnesses. Equally the evolution of science should be considered whereby new technologies may be quickly replaced by superior products ahead of patent expiry. Whilst there are exceptions (e.g. osmotic release oral system), oral administration may be easier for generic development and for a healthcare system to implement versus other methods of medicine administration.

CONCLUSIONS : There appears to be a strong methodological rationale for a lifecycle pricing approach. However, there are caveats that need to be considered when incorporating this approach into policy.